Shell (LSE:SHEL) issued a fourth-quarter 2025 trading update pointing to broadly stable production across its Integrated Gas and Upstream divisions, alongside seasonally weaker volumes in Marketing. Refining margins were slightly higher during the period, but this was offset by continued pressure on chemicals margins, leading the group to caution on overall segment performance.
The company expects its Chemicals & Products division to report adjusted earnings below break-even. Within this, the Chemicals sub-segment is forecast to record a sizeable loss, largely reflecting non-cash deferred tax adjustments linked to a joint venture, while Trading & Optimisation earnings are set to fall sharply compared with the previous quarter. Group cash flow from operations will also be negatively affected by around $1.5bn of working-capital outflows, primarily related to the timing of payments for German emissions certificates and routine German mineral oil tax settlements. In addition, group tax charges and segment results will be influenced by annual non-cash reassessments of deferred tax assets, including approximately $0.3bn of deferred tax impacts within Marketing and Chemicals joint ventures.
The update also outlined several structural changes with implications for future reporting. These include the consolidation of the Adura UK upstream joint venture, which will alter the timing of cash flows through dividend distributions, and the completion of a Canadian oil sands asset swap. The latter reduces oil sands production and lowers adjusted earnings in Chemicals & Products, while also decreasing non-controlling interests at the group level.
From a market perspective, Shell continues to be supported by a robust balance sheet and strong operational foundations, with valuation remaining attractive and recent earnings commentary broadly constructive. However, technical indicators suggest potential near-term weakness, while pressures on revenue growth and cash flow generation present ongoing risks to the outlook.
More about Shell (UK)
Shell plc is a global integrated energy company headquartered in the UK, operating across the oil and gas value chain. Its activities span integrated gas, upstream exploration and production, refining and petrochemicals, fuels and lubricants marketing, and a growing renewables and energy solutions business. Shell serves industrial, commercial and retail customers worldwide, with a strategic focus on liquefied natural gas, large-scale refining and chemicals, and the expansion of its lower-carbon energy portfolio.
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